Lord Freud – 2016 Speech on Welfare Reform

Below is the text of the speech made by Lord Freud, the Minister of State for Welfare Reform, in Birmingham on 11 July 2016.

It is a pleasure to be here in Birmingham for the annual IntoWork Convention.

Your aim at the Learning and Work Institute is that everyone has the opportunity to realise their ambitions and potential – in learning, work and throughout life.

Through the welfare reforms my department has been driving over the last 6 years we have sought to do exactly this.

Whether that’s been through changing the role of jobcentres, transforming the benefits system with Universal Credit, introducing new employment programmes, or testing innovations to constantly improve – we have endeavoured to get people into sustainable work, and to give them the support to stay in and progress in work.

What we are now seeing is an enormous cultural change – a change in the way that welfare is viewed, organised and delivered.

And I believe these changes are behind the labour market figures we are now seeing – with unemployment at its lowest rate for a decade, and the number of workless households down by over three quarters of a million since 2010.

Today I want to talk about the changes we have introduced – and about the innovations we are trailing to support people with complex and multiple barriers in to work.

So that we can continue to drive down the unemployment rate, and make sure that everyone has the opportunity to enter work and realise their potential.

Changing role of jobcentres

One of the most enjoyable parts of my job is taking people to jobcentres who have not been there for a number of years.

They still think of it as depicted in the Full Monty – with counters, job cards in windows, and long dole queues.

The welfare system we inherited discouraged work. Instead of giving people the tools and encouragement to look for employment, it wrote off large numbers of people as incapable of work.

Jobcentres were full of barriers – physical barriers with screens separating staff and claimants; technological barriers which made it difficult for people to search for up-to- date vacancies; and a routine of getting people to sign on instead of search for work.

When I take people to jobcentres now, they are amazed by the transformation that has taken place.

The system we have now is very different. It is more personal, it is digital, and it is more dynamic.

We have transformed the role of jobcentre staff. They now coach people into work by tailoring support to the needs of individuals and their local circumstances.

Through jobcentres people can get advice on finding a job, get help with retraining, and access thousands of new job vacancies every day.

This has also been made possible by digitally updating jobcentres so that people can access wifi and computers for their job search activities. And by up-skilling our own staff to assist people with their digital capability.

The new work coach approach means that jobcentre staff can work with claimants to create a personalised job search journey, concentrating on the person not on the benefits they receive.

It means that claimants can build up trust in their work coach, and that work coaches can get a better understanding of the claimants’ individual circumstances – so they can more effectively help them into sustainable employment.

I regularly visit jobcentres across the country, and when I make these visits what strikes me is the genuine enthusiasm, motivation and dedication of work coaches.

Because of our welfare reforms they feel that the system is unified – and that they can help people to lead independent, fulfilling lives through the tools we have put in place.

Universal Credit

There are a number of causes driving the labour market figures we are seeing. And I believe an important factor is the change in the relationship between jobcentre staff and claimants – driven by the introduction of Universal Credit.

We have shown that we can deliver real change by introducing Universal Credit – the biggest transformational change in the history of the welfare system.

Universal Credit is now live in all 712 jobcentres around the country. And by the time it is fully rolled out, it will affect 7 million people’s lives.

It is already making a real difference – with people moving into work faster and staying in work longer.

When we compare those who are receiving Universal Credit to a similar cohort of people receiving one of its legacy benefits, Jobseeker’s Allowance, we can see that people on Universal Credit:

– are spending around 50% more time looking for work

– they are 8 percentage points more likely to be in work

– and they are more actively looking to increase their earnings when they are in work

Universal Credit better reflects the world of work, to help people make the transition into employment more easily. With personalised support work coaches, monthly payments direct to people’s bank accounts, and support in and out of work.

It is also designed to be digital to respond to the technological changes in the way we live now.

Instead of having to go to a jobcentre to make an application, or phone multiple agencies to report a change in circumstances, people can now manage their claims online through a single account.

Data we have had from claimants receiving the Universal Credit full service shows that 99.6% of applicants for Universal Credit submitted a claim online. And 88% of changes of circumstances were reported online.

Universal Credit is transforming welfare, and it is central to our vision of a society where everyone can succeed and break free of dependency.

Work Programme

Together with the changes to jobcentres and the benefits system, our employment programmes have also played major roles in getting people back into work.

Key to this is the Work Programme, which we introduced in 2011 to support those at risk of long term unemployment back into work.

I believe the Work Programme has been a significant part of the growing economy, by supporting over half a million people to move into sustained employment and helping nearly 1.3 million people spend time off benefits.

Here in the Greater Birmingham area, nearly 35,000 people have moved into employment through the Work Programme.

The Work Programme has succeeded in transforming the lives of those furthest from the labour market. Participants are not just finding work, they are keeping it.

Throughout the country, in areas like Birmingham, providers are delivering innovative services to support participants back into work. Services such as budgeting advice, and support to overcome addictions and manage health conditions.

The Work Programme was designed and built for a different labour market when unemployment was higher.

The labour market we have now is one with a record employment rate. What remains is not cyclical unemployment but structural unemployment.

And it is only right that we adapt the support we provide to focus on this group.

This is what is driving our new Work and Health programme. It is being designed to tackle the remaining barriers.

Our new programme will test different approaches, and design and commission tailored programmes across the country.

We want to see a cross sector approach and encourage more collaboration and integrated services.

That means bringing together the health service, the welfare system, local authorities, the third sector, employers and disabled people themselves.

By working more closely together, we can become more effective at supporting more people back into work.

In designing this new programme we are taking the most successful aspects of the Work Programme and Work Choice.

We want to build on the success of everyone who went through these programmes, so that more people have the opportunity to enter work and change their lives.

Universal Support

To be successful in pushing employment up and unemployment down, we must become better at supporting the most vulnerable and excluded in society in to work.

Our aim is to support the needs of anyone whose conditions are stopping them from finding and staying in work.

It is not just the Work and Health programme which is focusing on tackling people’s barriers.

There are a number of other areas where we are working in partnership with local authorities and other organisations to do this.

For many people who are moving to Universal Credit, the transition will be straightforward.

However, we know that for some people, managing their Universal Credit claim online and budgeting their award effectively may be difficult.

That is why we have developed Universal Support to help people by improving their financial and digital capability.

We have been trialling this through our Universal Support delivered locally initiative. This tested the most effective way to deliver budgeting support and assistance with digital services in different areas of the country.

From the evidence we published last week we can see that there is a strong need for this service.

It has also shown us that claimants who need this support often also have a range of barriers such as literacy issues, a fear of technology, and difficulties accessing computers and broadband.

We aim to build on this work by looking at how Universal Support can be expanded – by encouraging joined-up services – to cover a wide range of complex barriers. The barriers that entrench worklessness and damage people’s life chances – for example, homelessness, addictions and debt problems.

An example of this working is the Welfare Partnership Hub located in Ashford jobcentre in Kent. This hub brings together a range of partners – local authority housing officers, the homeless charity Porchlight, Turning Point, a volunteer’s centre, Citizens Advice, and other local organisations.

Work coaches ensure that problems they identify in the claimants they see are tackled immediately by referring them directly to the relevant service in the hub.

Through such locally designed and integrated services, we can better meet the needs of people with complex and multiple barriers. And help them into sustained employment.

Localism and co-location

Indeed, this fits in with the wider government localism agenda of shifting power away from Whitehall – and giving local communities the power to shape local services to meet local needs.

As part of our Universal Support trials we modelled 4 different ways of integrating services to support people.

In some cases jobcentre and local authority staff were fully integrated into a single team, with support services co-located.

More commonly, all services were co-located into a single building, typically in a local authority building.

In the third model, jobcentre staff triaged claimants and referred them to services.

Finally, in some rural trials services were dispersed or delivered through networks of partner organisations.

What the Universal Support trials showed was the importance of the location of support services in determining whether or not claimants chose to engage with them.

The trials showed us that the co-location of services – where jobcentre services and local organisations are integrated within a local authority building – often led to a better service for claimants.

Access to support was more streamlined, there was better communication, and a more effective resolution of issues.

We currently have around 40 co-location arrangements in place and the benefits are clear – for claimants, our staff and for the tax payer.

Examples of this include Islington’s local authority Customer Centre. This hosts all 3 digital, financial and employment services.

Having these services in one place minimises the handover time between services and provides claimants with a “one-stop shop” for support services.

In Islington we found that bringing work coaches into the Customer Centre significantly increased the numbers of hard to reach claimants, whom they had previously had difficulty engaging.

The informative and helpful manner of staff and volunteers, combined with engagement in the home, was highly valued and claimants reported that it made them feel more comfortable to disclose information.

In more rural areas, where local geography limited the scope for co-locating services, we trialled a “hub and spoke” approach – for example in South Staffordshire and in West Lincolnshire.

This ensured that vulnerable and isolated claimants had a greater chance of benefiting from support services.

The trials have shown us that integrating support through co-location and joint working has greatly increased the variety of services available for claimants.

And that using this approach we can deal with a greater range of needs and treat barriers to work holistically.

Progression in work

Our reforms have not just been focused on getting people into work, but also on getting people to stay in and progress in work.

That is why – alongside the budgeting and digital support we are developing – we are trialling support looking at how people can progress in work.

This is the first time that any country has made a significant commitment to support people through the welfare system – to try and increase their earnings and progression at work. And to become independent of the welfare state.

We have developed a substantial programme of work to form the evidence base about what will be most effective in delivering this.

Part of this is the in-work progression trial run by jobcentres. This large-scale randomised control trial is being rolled out nationally across jobcentres, and will test different ways of supporting people in work and conditionality.

But it is clear that others outside of jobcentres have a key role in supporting progression. So, we are testing different approaches with a range of externally led trails.

These include:

– work with Goals UK, looking at motivational techniques to change individual attitudes to progression

– work with Timewise, who are testing ways of supporting progression through the design of job roles and workplace flexibility

– and projects my department is co-ordinating with the UK Commission for Employment and Skills (UKCES)

The UKCES projects involve 7 trials in the retail and hospitality sectors – sectors which have some of the lowest pay rates in the country.

Employers running these trials are testing strategies that demonstrate both clear business benefits – such as higher staff retention and productivity – and increased earnings for low paid employees.

These are crucial in helping us to develop the business case to support progression, and are vital if we are to address the wider issue of productivity.

These trials include a wide range of initiatives, such as:

– innovative work to develop a smartphone app with online learning, career coaching, and support for up-skilling

– redesigning job roles to enable progression for part time workers

– developing pathways for progression at work across the retail sector

– delivering tailored master-classes in the tourism sector
and supporting employers to improve people management and productivity

Across all the trials over 100 organisations are working in partnership to find innovative ways of designing jobs, delivering training, and ultimately raising the take home pay of workers on low wages.

All 7 of these trials have reported that they have made progress towards the aim of improving pay and progression for low paid employees – and that there is the potential to further enhance these opportunities over the next 12 months.

Indeed several of these projects are in discussion with other employers and stakeholders within their sectors to expand the reach of their trial beyond their funded period.

Implications of Universal Credit

To return to Universal Credit, it one of the biggest change programmes in government. The scale of it is driving innovation in other areas of my department’s work.

For example, it has implications for how funding for supported housing is best delivered in the future.

And it is a driver for innovation in the payments industry. There are a number of advantages to enhancing the payments system to enrich Universal Credit. From being able to reimburse childcare payments in real time, to minimising the opportunities for fraud and error to take place.

In my own opinion, in order for Universal Credit to be truly successful, it cannot just focus on getting people into work.

We have had a work first approach but we must focus, in equal measure, on ensuring that people stay in work and progress in their careers.

To me, this is fundamentally about pulling together the skills agenda alongside this work first approach.

Conclusion

What we are now seeing – in the development of the new Work and Health programme, in the expansion of Universal Support, and in our trials around progression in work – is a focus on partnerships and integrated services to help people overcome multiple barriers and move into employment.

Over the last 6 years we have introduced structural and meaningful changes in the welfare system.

This has transformed the welfare system into one that is focused on individuals and their personal journeys into employment.

We have achieved an enormous cultural change – and this is borne out by the strong labour market figures we are now seeing.

Our ambition has been to transform people’s lives by giving them the tools, incentives and support they need, to move into work and out of poverty.

I believe that this is what we are seeing now, and that the policies I have talked about today will continue to achieve this.